Intelsat S A : Consolidated financial statements of Intelsat S.A. and its group for the accounting year ended on December 31, 2020

Intelsat S.A.

Consolidated Financial Statements

For the year ended December 31, 2020

Stephen Spengler David Tolley

Chief Executive Officer Chief Financial Officer

4, rue Albert Borschette

L-1246 Luxembourg

RCS Luxembourg B162.135

Intelsat S.A.

Index to Consolidated Financial Statements

Page

Report of the Réviseur................................................................................................................................ Management Report................................................................

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10

Consolidated Balance Sheets as of December 31, 2019 and 2020 ................................................................................................ Consolidated Statements of Operations for the Years Ended December 31, 2018, 2019 and 2020 .............................................. Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2018, 2019 and 2020 ..............................31, 2018, 2019 and 2020 ........... Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2019 and 2020 ............................................. Notes to Consolidated Financial Statements ................................................................................................................................

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Intelsat S.A.

Management Report Business Review

For the year ended December 31, 2020

Background

global communications network of 52 satellites and ground facilities related to the satellite operations and control, and teleport services.

Recent Developments

Voluntary Reorganization under Chapter 11

the United States Bankr

- band spectrum set forth in the

reimbursement for such costs and the need for additional financing to fund the C-band clearing process, service our current debt obligations, and meet our operating requirements, as well as the economic slowdown impacting the Company and-1

On August 14, 2020, the Company filed its final C-band spectrum transition plan with the FCC. The FCC Final Order-band spectrum on amaterially all of its required contracts with satellite manufacturers and launch-vehicle providers to move forward and meet the accelerated C-band spectrum clearing timelines established by the FCC. Under the FCC Final Order, the Company is eligible to receive Acceleration Payments of approximately $1.2 billion and $3.7 billion based on the milestone clearing certification dates of December 5, 2021 and December 5, 2023, with the respective payments expected to be received in the first half of each successive year, respectively, subject to the satisfaction of certain deadlines and other conditions set forth therein.

The Chapter 11 process can be unpredictable and involves significant risks and uncertainties. As a result of these risks

significantly different following the outcome of theproperties and liquidity and capital resources, as applicable, included in this Management Report and accompanying consolidated financial statements may not accurately reflect its operations, properties and liquidity and capital resources following the Chapter 11 process.

Pursuant to various orders from the Bankruptcy Court, the Debtors have received approval from the Bankruptcy Court to generally maintain their ordinary course operations and uphold certain commitments to their stakeholders, including employees, customers, and vendors during the restructuring process, subject to the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code.

The filing of the Chapter 11 Cases constituted an event of default that accelerated substantially all of our obligations under the documents governing our prepetition existing indebtedness. For additional discussion regarding the impact of the Chapter 11 Cases on our debt obligations, see Note 12 Debt.

-amortizing multiple draw superpriority secured debtor-in-

020, Intelsat

AgreemeDIP Credit Agreement, dated as of November 25, 2020. For additional information regarding the DIP Facility, DIP Credit Agreement, DIP Amendment No. 1 and DIP Amendment No. 2, see Note 12 Debt.

On July 11, 2020, the Debtors filed with the Bankruptcy Court schedules and statements setting forth, among other things, the assets and liabilities of each of the Debtors, subject to the assumptions filed in connection therewith. These schedules and statements may be subject to further amendment or modification after filing.

On February 11, 2021, the Debtors entered into a plan support agreement (together with all exhibits and schedules

including but not limited to the Consenting Creditors voting in favor of the Joint Chapter 11 Plan of Reorganization of Intelsat S.A. and Its Debtor Affiliatesmilestones (unless extended or waived in writing). On February 12, 2021, the Debtors filed the Plan and the Disclosure Statement for the Joint Chapter 11 Plan of Reorganization of Intelsat S.A. and Its Debtor Affiliatesr 11 Cases, including (i) events leading to the Chapter 11 Cases; (ii) significant events that took place during the Chapter 11 Cases; (iii) certain terms of the Plan; and (iv) certain anticipated risk factors associated with, and anticipated consequences of the Plan. The Bankruptcy Court is currently scheduled to determine the adequacy of the Disclosure Statement and whether the Plan meets the requirements of the Bankruptcy Code in the second quarter of 2021.

Gogo Transaction

On December 1, 2020, we completed our acquisition of Gogo Inc.commercial aviation business. As a result of the, we became the global leader in providing in-flight-flight entertainment solutions to the commercial aviation industry.

Update on the Impact of COVID-19 on the Company

The COVID-19 pandemic has had an adverse impact on our business, results of operations and financial condition, a trend we expect to continue. Among the impacts of the COVID-19 pandemic were a reduction of revenue and a decreased likelihood of collection from certain mobility customers. We continue to closely monitor the ongoing impact on our employees, customers, business and results of operations.

Business overview

As of December 31, 2020, our contracted backlog, which is our expected future revenue under existing customer contracts, was approximately $6.1 billion, roughly three and a quarter times our 2020 annual revenue. For the year ended December 31, 2020, we generated revenue of $1.9 billion and net loss attributable to Intelsat S.A. of $911.7 million. Our Adjusted EBITDA, which consists of EBITDA as adjusted to exclude or include certain unusual items, certain other operating expense items and certain other adjustments, was $1.3 billion, or 67% of revenue, for the year ended December 31, 2020.

In 2020, our financial results reflected the significant economic impact of the COVID-19 pandemic, as well as lower volume of services due to non-renewals of certain contracts. The effect of lower prices in 2020 was muted as compared to prior years. Overall, we believe we benefit from a number of characteristics that allow us to effectively manage our business despite these competitive and geo-economic pressures:

Significant long-term contracted backlog, providing a foundation for predictable revenue streams;

Deployment of our next generation high-throughput satellites and software-defined satellite platforms that were designed to support new services, representing $4.1 billion of potential incremental growth by 2025 from expanded enterprise, wireless infrastructure, mobility, and government applications;

High operating leverage, which has allowed us to generate strong Adjusted EBITDA margins in the past three years;

Acquisition of the leading provider of IFC services, positioning us as a market leader in the fastest growing segment of satellite mobility; and

A stable, efficient and sustainable tax profile for our global business.

We believe that our leadership position in our attractive sector, global scale, efficient operating and financial profile, diversified customer sets and sizeable contracted backlog, together with the growing worldwide demand for reliable broadband connectivity everywhere at all times, provide us with a platform for long-term success.

Results of Operations

Years Ended December 31, 2019 and 2020

Revenue

The following table sets forth our comparative revenue by service type, with Off-Network and other Revenues shown separately from On-Network Revenues for the years ended December 31, 2019 and 2020 (in thousands, except):

On-Network Revenues

• Managed services 374,026 298,638

• Channel 2,4001,394

Total on-network revenues Off-Network and Other Revenues

Transponder, MSS and other off-

• network services 175,602 182,393

• Satellite-related services 40,64642,297

Total off-network and other revenues Inflight Services Revenues

Year Ended December 31, 2020

1,845,217

1,672,805

216,248

224,690 8,442

Equipment

Total inflight services revenues

-- -

14,12214,1221,463 1,463

NM NM

15,585

15,585

NM

Total

$ 2,061,465 $ 1,913,080 $

(148,385)

(7)%

Income from Operations

In 2020, our income from operations was $0.3 billion, a $0.1 billion decrease compared to 2019, which is attributable to the decrease in revenue. The decrease in revenue was primarily due to non-renewals, renewals at lower pricing or lower capacity and service contractions. Operating expenses increased, largely due to increases in bad debt expense, professional fees and other costs related to the acquisition of Gogo CA, and staff-related expenses. Additionally, we recognized an impairment of non-amortizable intangibles and other assets (see Note 11 Goodwill and Other Intangible Assets). These increases were offset by the recognition of a satellite impairment loss in 2019 with no comparable loss in 2020 (Note 9 Satellites and Other Property and Equipment).

Interest Expense, Net

Interest expense, net consists of gross interest expense incurred together with gains and losses on the interest rate cap contracts we hold (which reflect the changes in their fair values), offset by interest income earned and interest capitalized related to assets under construction. As of December 31, 2020, we held interest rate cap contracts with an aggregate notional amount of $2.4 billion to mitigate the risk of interest rate increases on the floating-rate term loans under our senior secured credit facilities. The interest rate cap contracts have not been designated as hedges for accounting purposes.

For the year ended December 31, 2020, interest expense, net was $813.6 million as compared to $1.3 billion for the year ended December 31, 2019. The net decrease of $459.5 million was principally due to the following: (i) a decrease of $433.2 million in interest expense primarily resulting from Chapter 11 restructuring activities, partially offset by an increase in interest expense recognized on our senior secured credit facilities, and (ii) a decrease of $22.5 million corresponding to a larger decrease in fair value of the interest rate cap contracts during the year ended December 31, 2019 as compared to the year ended December 31, 2020.

Reorganization Items

Reorganization items reflect direct costs incurred in connection with the Chapter 11 Cases. Reorganization items of $385.9 million for the year ended December 31, 2020 primarily consisted of $197.0 million related to the write-off of debt discount, premium and issuance costs, $129.7 million in professional fees and $59.7 million in financing fees related to the DIP Facility. There were no comparable amounts for the year ended December 31, 2019.